Axis Mutual Fund has announced the launch of their New Fund Offer (NFO) – Axis S&P BSE Sensex ETF. This is an open ended exchange traded fund tracking S&P BSE Sensex TRI) and will be available for subscription till March 15, 2023. Ashish Naik would be managing the fund and the minimum investment amount is Rs 5,000 and in multiples of Re 1/- thereof.

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The new fund will track the S&P BSE Sensex TRI benchmark and endeavour to generate alpha by investing in domestic equity ETFs basis the fund manager’s top down investment view.

ETFs are soon becoming one of the most popular vehicles of investing in passive strategies as they replicate the portfolio of the underlying index while trading in bite sized units on an exchange at market determined prices, the fund house said.

The investment objective of the Axis S&P BSE Sensex ETF is to provide returns before expenses that correspond to the total returns of the S&P BSE Sensex TRI Index subject to tracking errors. However, there is no assurance that the investment objective of the scheme will be achieved, it said.

The scheme endeavours to invest in stocks forming part of the underlying index in the same ratio as per the index to the extent possible. Essentially, 95 percent to 100 percent of the investments will be made in equity instruments covered by S&P BSE Sensex TRI and the remaining in debt and money market investments.

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As the scheme aims to invest and maintain domestic ETF exposure greater than 95 percent of net assets at all times, the resulting tax treatment will be that of equity mutual funds. Given the mutual fund structure, investors can look to invest through various systematic options like SIPs, STP’s and lumpsum investments.

Some key attributes of the fund include:

Low cost passive investment solution - A hassle free solution for investors looking for a low cost equity product

Elimination of bias - As the fund invests in the underlying index, it eliminates fund manager bias while purchasing/selling securities

Equity taxation - As all investments will be made in Equity instruments covered by S&P BSE Sensex TRI, the scheme is subject to Equity taxation

Endeavour for minimal tracking error - The passively managed fund endeavours for minimal tracking error as it aims to replicate the benchmark

Chandresh Nigam, MD & CEO, Axis AMC said, “With the launch of the Axis S&P BSE Sensex ETF, we are aiming to create a low friction investment strategy that relies on broader market wisdom coupled with our principle of ‘quality and growth’ philosophy to yield wealth creation opportunities for investors.”

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(Edited by : Anshul)